Digitalization Adoption Barriers in the Context of Sustainability and Operational Excellence: Implications for SMEs

Abstract

In the global landscape, small and medium enterprises (SMEs) are increasingly enhancing their adaptability to capitalize on evolving market prospects. Industry 4.0 technologies, with their primary focus on improving operational excellence, hold immense potential for contributing to the sustainability of SMEs. These technologies optimize resources, repurpose materials, enable remote working, and minimize waste, thereby fostering a resilient business environment. In the current study, the authors have utilized the Technology, Organization, and Environment (TOE) framework to conduct a comprehensive literature review and identified the key barriers. Research questions and hypothesis were formulated. A questionnaire-based survey was conducted, involving 205 discrete manufacturing SMEs. The authors evaluated the proposed hypotheses using the Partial Least Square Structural Equation Modeling (PLS-SEM) technique to gain insights into their causal relationships. Identified barriers are categorized as adoption barriers, lack of in-house technology skills, readiness barriers, and adverse operational realities. The authors observed that lack of strategic planning, inadequate focus on processes and performance monitoring results in barriers that hinder the digitalization of SMEs. Further results anticipate that operational realities have a direct relationship with readiness barriers of SMEs. This implies that challenges such as workforce turnover, pricing pressures, last-minute design changes, overdue payments, and outdated infrastructure can lead to operational difficulties, resulting in suboptimal strategies, business plans, and ineffective processes. The findings of the current study also imply that implementing shopfloor industrial Internet of things (IIoT) to track performance and interventions through digital definitions of products and manufacturing can further strengthen processes. By incorporating the findings from this study, SME stakeholders can develop strategies to achieve operational excellence while fulfilling their sustainability goals.

Keywords:

• Industry 4.0
• Digitalization
• Barriers
• Sustainability
• Operational Excellence
• SMEs

EMJ Focus Areas:

• Engineering Management Profession, Operations Management, Strategic Management, Sustainability

Disclosure Statement

No potential conflict of interest was reported by the author(s).

Supplemental data

Supplemental data for this article can be accessed online at https://doi.org/10.1080/10429247.2024.2372519

Additional information

Notes on contributors

Ravinder Kumar

Ravinder Kumar is a Professor of Mechanical Engg. at Amity University, Noida, India. He holds a bachelor’s degree in Mechanical Engineering with Honors. He did his master’s and Ph.D. from Delhi College of Engineering, University of Delhi, India. He has more than 23-year teaching experience in U.G., P.G., and Ph.D. His areas of interest include sustainable supply chain management, Industrial digitalization, Industry 4.0, Sustainable manufacturing, Sustainability assessments, and SCM issues in SMEs. E-mail- [email protected]

Gautam Dutta

Gautam Dutta has more than 38 years of experience in the areas of IT and PLM industries and has held leadership roles in organizations like Siemens DISW, PTC, IBM, and TCS. During his professional tenure, Gautam has been associated with projects related to organizational transformation through the adoption of digital technologies. In recent years, he has been engaged with India’s industry associations to establish Industry 4.0 awareness among SMEs and enable them to take advantage of global opportunities. E-mail- [email protected].

Rakesh Kumar Phanden

Rakesh Kumar Phanden is an Associate Professor at Amity University, Noida, India. He has performed funded industry consultancies and research projects. He is a sponsor of RSP Scholarship Program. He has published six books and edited five special issues. He is serving as an editorial board member for many journals. He has 16 years of experience. His current areas of interest include manufacturing sustainability, I4.0, production scheduling IPPS, and LSS. He has received travel grants from DST Govt of India, Amity Uni, MMU to visit USA, London, Canada, and many African countries. E-mail- [email protected].